Monthly Archives: July 2007

Saw on the AppleInsider that there’s an Apple announcement coming next Tuesday, with the explicit “no iPod, no iPhone news” comment. My prediction is they are going to launch an ultraportable table MacBook (or some other fancy name). I specifically think it’ll be a 12.1″ display and be the width of the iPhone, have no keyboard at all, USB, FireWire, BlueTooth, WiFi and possibly built-in AT&T Edge access. Here’s my rationale:

I can’t believe they’ve invested so much R&D to make touch screens work well, yet only deploy it on the iPhone. Seems like they’d want to reuse that technology.

Further, since the iPhone runs OSX (sorta), there’s no “porting” to make it work on the other hardware platform.

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There are times in life where work feels closer to a hobby than “a job” – doubly so when a company you work with makes products that tie in to people’s hobbies. As (apparently) more than a few of my colleagues know, I’ve been working with “some cool gadgety startup” since the Winter, and now I can finally talk a little bit about them. The company is called Bug Labs, and it is producing an open-source hardware and software platform for building, well, gadgets. And not just gadgets like the conventional ones we think of and see every time we walk into a Best Buy, more like the gadgets that couldn’t possibly make it to a retail store shelf.

I’ve spent about 10 years designing, building, and marketing “convergence” devices. I’ve helped companies big and small attempt to bring them to market, and I’ve watched others try to do the same. With the exception of the Slingbox, all performed poorly on the market. But the reason for this is mostly due to the definition of market success. In 2000 or 2002 or even 2006, the “digital home” market was a small one (and in many ways still is today). So when I built a device with a Pioneer or an HP, and it sells by the thousands or tens of thousands, it’s a failure. These types of companies spend no less than six figures (and typically seven) on product development, and it’s typically much more than that (not even including marketing budgets).

Bug Labs’ platform, on the other hand, enables anyone to configure a device for a niche market, whether its 1, 1000, or 10,000, and be a market success. The company is effectively disintermediating the entire consumer electronics design, manufacturing, and retail process. By taking down these massive barriers to entry, an engineer (or entrepreneur) can purchase hardware from Bug Labs, build software for it, and create a new market for the configuration of their choosing.

Peter Semmelhack, the company’s founder and CEO, blogged today calling the product “Legos meets Web services & APIs”, a phrase I think is very appropriate. Most hardware kits contain pieces as low level as transistors, chips, and resistors (oh my!) which even with drivers and SDKs still require a lot of knowledge to work with. If you think about a Lego block, it’s a basic module that you inherently know how to use. This is the right analogy for Bug modules, they are pieces that make sense to any programmer. I’d say I’m a well-below average coder, but can still hack well enough to hook up Facebook and WordPress for example. With the Bug platform, I probably couldn’t make the best gadget, but at least I’d be able to give it a shot. That’s the hobby I enjoy.

Last night’s dinner with Peter, DaveWiner, Robert Scoble, Ryan Block, and Jerry Michalski was the first time we had the chance to talk openly about the company. It wasn’t “the launch” and there’s no “official press release” available. Instead, there’s a conversation, and a blog post with an early greeting (yes Zoli & Henry, we will have product info out soon). One of the key goals of the company is to embrace numerous communities, including open source, digital divide, and online technologists. While we’ll do some traditional marketing activities such as a press tour, you’ll also see us on college campuses, at XYZ-Camps, and doing other very “accessible” and inclusive activities.

I’ll be handling the outreach for the company, and while we still have a way to go until the Web site and products are available, I encourage anyone interested in being involved to get in touch, either here through a comment, by email, or even by IM. Looking forward to the next steps!

I’m going to make the statement here that this probably won’t apply if you are uber-famous or have raised a billion dollars to foolishly sell groceries online 5 years prematurely. My recommendations are based on “the average startup” and probably relate more to consumer-focused ventures, I am not much of an enterprise services kind of guy.

“Early Development” aka “I have a dream”: If you are in this super-early phase of a company, the only things you want to do with a conference is attend, learn&listen, and network. Unless you are a “known entity” in your respective tech community, or unless you are trying to pull some uber-stealth-buzz-marketing move (proceed with caution), there’s virtually nothing to gain by being a sponsor or panelist. A good stealthy company should be trying to fly under the radar as much as possible.

“Basic Demo” aka “Stealth Mode”: OK, the engineers (or possibly just you) made something work, it’s a good proof of concept but probably pretty ugly. Your friends think it’s a sure thing, the next Google in fact. My advice to you – stay stealthy right now. Most of your friends won’t tell you the haircut isn’t so great, but you should probably let it grow in a little before getting out in front of too many strangers.

“Need Funding” aka “Wookin Pa Nub”: Let’s assume that by looking for funding you’ve got a nice demo (or powerpoint) and you are comfortable with some press happening should the occasion arise. At this stage, I’d definitely pick out conferences that have decent VC attendance (easy tip: look for ones with VCs as sponsors) and try to get on a panel. I’d consider doing a Demo/Under The Radar/TC20-style event, but probably recommend avoiding spending too much (anything over 5 figures) as you’re effectively rolling the dice on an extreme crapshoot.

“Launching Soon” aka “Tummy Full O Butterflies”: So now you’re in some kind of private beta test, almost ready to show the world. People, this is your time to shine. Get out there, and get the buzz going. Again, I’d caution against spending too much money, but I’d probably have people in your team tracking all of Scoble’s favorite events and sending one or more to as many as possible. Get your message out there.

“Launch” aka “Launch”: Now is where my advice will take a bit of a controversial turn. I’m going to have to divide you up into different companies based on the interestingness of your company. This is tricky, since everyone likes to think they have a super-duper interesting company. Unfortunately, this is not true, and the more sober, koolaid-free look at yourself you can make, the better you’ll do (in general).

Extremely Interesting: You sure? Okay then – my advice to you – do not launch at a conference unless it is either the D: All Things Digital event or a mega-trade-show like CES or NAB. Why? You have so little to gain, and so much to lose. If you are super-interesting, then all you are doing is creating an environment at which you are more likely to fail than succeed. Demoing in 6 minutes in front of a wide group instead of taking 20 minutes one-on-one just doesn’t compare. And if you really are that interesting, all you need is someone with a half-decent rolodex and good interpersonal skills to set up all the meetings you can use. Everybody wants a hot story, why shoot all your ammo at once when you can spread it out at your leisure?

Somewhat Interesting: This is, realistically, most companies. If you’ve got something decent-to-good, but not over-the-top wow, and not a snoozefest, then I’d recommend leveraging an event that has a lot of press congregated together. The caveat is this: you run the risk of using up all your marketing karma in one shot, and missing the mark a little. A bad demo or someone else there with a killer story, and you are instantly below the fold on Techmeme. Proceed, but like you would in any good war, do as much recon as you can beforehand!

Not-so-interesting: First of all, my applause for being humble enough to read this. There’s plenty of great startups with great technology that just aren’t all that exciting, but still viable to become profitable or get acquired. My basic advice to you is to avoid any show-and-tell scenarios, and get on as many panels as you can. You want to create perception of knowledge and expertise, but don’t want some random group of “judges” who don’t quite get it barking at you for having a yawner demo.

“Post-Launch” aka “We’re out there, and we’re loving it!”: At this point, there’s no clear-cut answer. I tend to focus on analyzing attendee and press lists, and seeing how an event fills a gap in my current programs. Also, there’s a certain amount of a pulse you want to keep going – staying visible and keeping momentum up is important. That said, try not to be that company that attends, sponsors, and demos at every single event in a season – a little good judgment is not only cheaper, but more impactful. It shows you put a little thought behind the money, not just money behind the money.

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Last week I rolled up the sleeves, dusted off the old PHP memories, and got a little down and dirty to take a swing at a new site called AppRate.com. While watching people like Scoble, Mario Sundar, and Dave McClure add and remove about 40 applications per day (just kidding guys) on Facebook, I was getting curiouser and curiouser as to which were the “good” applications, versus the bad and the ugly. But Facebook’s “review” system is really just a meaningless comments board.

So I decided to build my own, and distribute the power back to the community. On our side, we add the applications to the site, throw in a screenshot, a little blurb, a link, and our rating. The rest is up to you. Voting is totally open with no registration needed – I’m hoping that empowering the community will overwhelm anyone’s urges to game the system. The site automatically calculates the top scoring and most voted-on items. In addition, anyone can easily add comments, although first-comments need moderation due to the power of the spambot world.

I’ve also taken a few extra moments to write a Facebook App that shows the Top 10 from AppRate. It’s not quite as versatile right now, I think it needs to link directly to the applications instead of the reviews, but that’s all I’ve figured out so far. Would love some feedback on this one, I’ve forgotten how much fun tinkering is.

“We find these numbers impressive, showing that a fair amount of customers are willing to pay high early cancellation fees (~$125-$200) to get out of their existing service contracts for an iPhone,” analyst Shaw Wu wrote in the report.

Now, Mr Wu’s job is to get people to buy Apple shares until it hits the price target he’s set ($165). That is what he is paid to do. So writing a comment like that probably makes sense, again, given his job.

Let’s establish a couple of baselines here, shall we?

Most people who bought an iPhone in week one were unlikely to have “saved up for it” or put it on layaway. A $500 phone is bought by those with enough financial resources to make it a non-decision.

Most people who bought it in week one had to have it. Whether they are “early adopters” or just wanted to be part of the moment in history (and it most certainly was one), it was an entirely deliberate act.

If you accept those truths, then is saying “oh, and about 25% had to spend an extra $200” a big deal? No, it is not. In fact, it’s fairly obvious. To this segment, the act of switching carriers was no bigger than the batch of people who did it to get the first Razr.

This is NOT indicative of the masses, and Mr Wu’s claim of how he “expects iPhone to bring smart phone technology into the mainstream” is another piece of manipulation I find frustrating. There are over 100 MILLION smartphones in use today.

It’s fairly clear to just about everyone right now that the iPhone is exciting, and is a great sign of the power of Apple’s brand as well as what happens when you make good products – people want them. For those who’ve misread my previous posts, I absolutely agree it’s an impressive device, just not the one I want (although my terrible experience with my Sony Vaio VGN-SZ460N is certainly making me open to buying a Macbook these days).

I’ll make two predictions about the iPhone market moving forward:

ONE: If the current rate of switching carriers by breaking contract is 25%, it’ll be less than half of that by the end of the year. People may switch out of contract, but I think the massive wave of this part is done.

TWO: Everybody falls into one of these three categories:

Owns an Iphone

Doesn’t own one, but has already decided they will buy one, are just waiting for some trigger factor (money, end of contract, seeing a friend use it, etc)

Doesn’t own one, but has already decided they will not buy one, for whatever reasons.

I don’t think anyone else is really on the fence anymore, and I doubt that a lot of people who have already decided against it will switch. I was wrong about my iPhone-eBay predictions, we’ll see how I do this time!

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To the best of my knowledge, deregulation of utilities and services in the USA have generally led to price gouging. The cable industry in particular raised rates over 50% in the first six years since being deregulated in 1996 (source). Even with competition from satellite and phone companies, your living room TV is about the biggest cash cow companies like Comcast, Charter, Cox, Time Warner, and others have ever seen. Sure we’re seeing money flow to new services (see my buyshifting articles for more thoughts on that topic), and Joost (and others) are enabling free, or virtually free TV services. But that’s not stopping the cable companies.

The AP reported today that cable companies intend to increase rates by $2-3/month in 2009, blaming the FCC-mandated digital transition for the hike.

Time Warner Cable Inc. spokesman Alex Dudley said the company agrees with the cable industry’s stance that the FCC cable card rule is a “tax” on consumers.

This is a bad thing. Not just because they want to increase prices, which they are entitled to do, despite being either a network of monopolies or oligopolies, depending on how you look at it. Not just because despite deregulation over 90% of Americans only have a single cable service provider option. And not just because the cable companies have seen fit to exploit their entrenched position to impose rate hikes at a rate of over three times inflation.

Chris Murray, senior counsel at Consumers Union in Washington, said it’s convenient for cable companies to blame regulators when they’ve stalled about complying with the FCC rule for years. Cable operators also have had no problem raising rates regularly for various reasons.

“They raise rates three times faster than inflation every year, for more than a decade,” he said. “Cable companies want to have absolute control. We don’t think they should have it.”

Cable companies have known about the digital transition for years. It’s been delayed time and time again. They’ve had ample opportunities to build infrastructure and save the necessary funds to make the transition painless. Instead, they wait to the 11th hour, and then attempt to pass the buck.

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Just saw The Transformers movie. Had a grand ol’ time. Kudos to Michael Bay for, well, not over-Michael-Baying it. I’m not doing any sort of review here, I’ll leave that to the pros, but I will say it most certainly stirred all the memories playing with the toys and watching the cartoon as a 13-year-old.

What’s bad:

Dialogue could only be worse had George “metachlorians” Lucas written it himself.

Way too many characters with way too many mini-plots.

Couldn’t always tell which Transformer was which during the action scenes.

Did I mention the dialogue?

The scene Bay lifted from The Rock (his own movie).

Little too much time in the backyard (you’ll know what I mean).

What’s good:

Best. CGI. Ever. Seriously, only after walking out did I have that realization of “those weren’t really robots!”

Novel action sequences – it wasn’t just one long punch-em-up.

Solid(ish) plot. Look, it’s a comic book movie, so you have to start with fairly low expectations. That said, they weaved together a decently credible storyline with only a few “really?” scenes here and there.

Not scared of a little violence, but also not gory or nauseating. I think Gears of War actually has more violence in the opening sequence than the whole movie had.

Not too ridiculous a use of technology (other than the whole cars-turning-into-robots thing), although “hand me a screwdriver” was a bit silly.

Quite a few throwbacks/references to the original cartoon.

It’s just plain fun, and doesn’t take itself too seriously!

Considering I don’t get to see many movies these days, I was glad to make it through the 2.5 hour (OMG yes) flick and not do a watch-check or anything else. I had a lot of fun. It’s no masterpiece theatre, but I have a hunch this’ll go down as the most fun movie of the summer.

Happy 4th o’ July everybody!

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I recently had a lengthy discussion with my Rabbi talking digital media and more specifically on content piracy. One area we focused on was about people’s awareness of right and wrong, and their tendency to do wrong, whether intentionally or unintentionally. Many have conjectured that consumers would stop “stealing music” if there were “better systems” in place to buy it and use it legally. At this point, I think it’s fair to say the systems are there, and they aren’t really working.

First, to stop a counterpoint in its tracks – I know iTunes sells a bunch of music to a lot of people. Even Steve Jobs himself stated that Apple estimates about 3% of music (max) on iPods is purchased, leaving 97% ripped or copied/downloaded. When I did a music survey several months ago, over 60% of the people who completed it acknowledged a peer-to-peer download within the past 30 days. Let me repeat: 2 out of 3 people are actively illegally downloading content.

Over the past month I’ve randomly been asking friends and strangers the following questions:

Do you download music that you don’t pay for?

Is that wrong?

Would you walk into a Best Buy and walk out with a CD without paying for it?

In almost every case, the answers are, predictably, YES, NO, and NO. Interestingly, there’s no reason to ask people if shoplifting a CD is “wrong” – they know the answer to that one. More importantly is the focus of the second question and the corresponding response. People today, in general, do not believe the act of downloading or copying music files is wrong.

Marc Cuban has some excellent thoughts on the future content, including this one (source):

Can the music industry be saved ? Yep. It would be so easy its scary. Make music available anywhere and everywhere.

In my eyes, this isn’t nearly enough. If people don’t think of it as wrong, then the problem the music industry faces is deeper than availability, access, DRM, synching, devices, mobility, PCs, iPods, or anything of the sort. The problem is morality can’t be spun. Morality is exceptionally hard to market.

Consider the cases where the RIAA has prosecuted college students (and others) for peer-to-peer sharing. Without fail, bloggers and even mainstream media tend to leap to the defense of the sharer, rarely to the side of the RIAA. Deep in the hearts and minds of modern technology culture, there is a belief that sharing music files isn’t wrong.

My suggestion to the industry at-large is two-fold:

Publishers/Labels: Enjoy sales why they last, but intensely build out ad-supported models. Figure it out, and do it soon. There should be plenty of money to keep publishers and producers in business. Also, while you are at it, stop throwing money at sensationalist acts that are only good for a track or two – it is a model that has led to the problems you face today. Focus on spreading your promotional and development budgets much wider across many genres and acts.

Artists: Continue to focus on the live shows. It’s fairly accepted that that’s how you make most of your money anyway, so work on deals that heavily emphasize your touring and live revenue. Also, figure out how to do live streaming for micropayments, and enable a revenue source from a fan base you can’t otherwise touch.

I could probably come up with another dozen or so models that would work, from unlimited subscription plans to “donation” options. At the end of the day, when they say “if you can’t beat em, join em” it’s time to realize that there is a massive groundswell of people who do not, cannot, and will not accept the concept that music sharing is wrong. No number of lawsuits or failed DRM experiments is going to change that, nor cleverly phrased advertisements at bus stations.

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Quickie post here, but I did a full system recovery this past weekend, and now appear to have a working computer. Of course, the initial reaction you should have is: it completely sucks that one would have to do a system recovery just to get their brand new computer working properly!

For those doing their research, I unfortunately can’t recommend Vaios anymore. Maybe this’ll change down the road, but it’s simply ridiculous that the out of box experience I had was so terrible. Granted I’m a power-user and I probably tried doing too many things simultaneously during the first-time setup, but if that’s enough to mess it up, it shouldn’t have given me that much control.

That behind me, I will say that *this* version of my VGN-SZ460N laptop seems to work pretty darn well. I’ve disabled Aero, but otherwise Vista is cranking away. For now.

Further, there are a lot fewer people influenced by style and experience in the phone industry than in others. The Razr (aka the most successful cell phone of all time) moved 50M units in 4 years. And that’s been THE trendy phone to-date, and you can get them for next-to-nothing already.

But I’ll keep going, the turnover rate in mobile phones in the US is under two years and dropping. In countries like Hong Kong it’s hovering just over 3 months. So Apple has to not only have the “best” phone (already questionable), but they must sustain that position continuously.

Also (I’m on a roll here), don’t forget that the mobile OS industry is much less locked-down than the PC industry, where the only competition takes 5 years to put out a terrible upgrade to their OS. There are 4 other solid mobile operating systems for manufacturers to choose from, all of which allow for tremendous device flexibility.

Finally, unlike the PC industry which operates on margins so bad that a single tech support call makes a PC unprofitable, there’s plenty of money in mobile. LG, Samsung, Moto, and Nokia (to name a few) will not bend-over quite as peacefully as Compaq, Dell, Gateway, and Sony (you know Sony, right, makers of my hunk-o-laptop?) have to the competition.

Will Apple be a player in the mobile space? Definitely. Will they utterly dominate it the way they do the music space? I have to say it’s possible, but I highly doubt it.

I have to remember to write a blog post talking about domain expertise and the difference between the Web world and the device world.

I think these two have started a great analysis, and I’d suggest a third mini-path to add as well (and would make a pretty graphic if I weren’t in the midst of some very frustrating issues with my new Vaio and Vista). My third path would go right in between the other two, and would have these steps:

3. Ennui – at this point the blogger is neither focused nor disappointed, they are, in a word, bored. Maybe they have some traffic, maybe they don’t, but they find it more challenging to create content on a recurring basis. Writing becomes irregular, infrequent, and spans numerous topics. From Ennui, the blogger will either move on to 4a:Revival or 4b:Malaise.

4a. Revival – something sparks life back into the blogger, either another blog post, a personal or life-changing event, or some huge piece of industry-specific news. The blog regains its pulse and attention, and the blogger’s back on top of his/her game. From here, the blogger moves back into stage 2:Expectation.

4b. Malaise – the blogger posts even less frequently, and the blog becomes more of an afterthought than an activity, and is on its way to out. The blogger doesn’t necessarily go through Kent’s stages of alienation, because based on sheer numbers, most bloggers don’t really get intertwined with “the blogosphere”. In this case, reality sets in for the individual that they just aren’t a writer. I firmly believe that not everyone was meant to blog (or podcast or vlog). Blogging seems like a great idea when we all start it, but let’s face it: blogging is work, and good blogging is hard work. Most people don’t enjoy spending time on activities wherein they aren’t being successful or feeling good about themselves. After this, Kent’s original stage 5:Abandonment is the only spot left to go.
I’m curious to see where the thread goes from here.

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About

Jeremy Toeman is VP Products for CNET. He has over 15 years experience in the convergence of digital media, mobile entertainment, social entertainment, smart TV and consumer technology. Prior ventures and projects include Viggle, Dijit Media, Sling Media, VUDU, Clicker, DivX, Rovi, Mediabolic, Boxee, and many other consumer technology companies. This blog represents nothing but his personal opinion and outlook on things.